Recovery in south and eastern Mediterranean remains slow, EBRD says

By Nibal Zgheib

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The EBRD has cut its 2104 economic forecasts for the southern and eastern Mediterranean region after a weaker-than-expected performance in the first quarter from Egypt, Tunisia and Morocco.

The region as a whole is now expected to show growth this year of 2.6 per cent compared with 3.0 per cent seen in May.

Output growth in the region is expected to improve to 3.7 per cent in 2015, supported by recovery in the Eurozone, political progress in some countries and the economic reform measures across the region particularly in reducing energy subsidies.

The EBRD’s latest economic outlook said first quarter Egyptian exports had declined as sales abroad of petroleum products were cut to make up for domestic energy shortages.

The recovery in Tunisia had been timid, reflecting sluggish growth of the industry and poor performance of phosphate and energy exports.

In Morocco, economic activity in the first quarter was significantly weaker than previously estimated, with agricultural activities contracting and non-agricultural output underperforming as construction and industrial activities struggled.

The EBRD cut its 2014 growth forecast for Egypt to 2.2 per cent from a previous 2.5 per cent. The outlook for Morocco was cut by 0.7 percentage points to 3.5 per cent and in Tunisia GDP is now seen rising 2.9 per cent, against a previous forecast of 3.4 per cent.

The forecast for growth in Jordan for this year was held unchanged at 3.4 per cent. Growth in Jordan was driven by stronger performance in agriculture, mining and utilities, though the recovery in exports remains modest amidst regional turmoil and weak external demand.

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